It's entirely possible a majority of retail investors make a killing and a few large funds get liquidated. At least it was until the coordinated action to protect those hedge funds today.
- “We’re going to put these hedge funds into bankruptcy”
- “These hedge funds will buy all our stocks at inflated prices”
If the hedge funds can buy all the stock, they’re not at risk of going bankrupt.
And if they are at risk of going bankrupt, they can’t buy all the stock at inflated prices.
A lot of retail investors are going to lose money when this bubble pops. /r/wsb has not invented a new way for everyone to get free money.
Fundamentally the funds made an extremely risky bet and the market is (or was at one point) seemingly reasonably and expectedly betting against it with a short squeeze. The new part is the social hype driving the squeeze via an army of retail investors.
Agree some retail investors are inevitably going to be left with a net loss here, which will suck. But it was (and may still be) a reasonable play when viewing the market as a gambling platform (which the funds were doing by over-shorting).
My hope is that the people claiming to be cashing out their 401k on GME are partaking in anonymous internet hyperbole to fuel the hype and the vast majority are gambling with a few bucks they can afford to gamble with because they can't do anything else right now.